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EXHIBIT 6
SPECIAL CONSIDERATION ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into as of
March 5, 1998 by and among XXXXXXX FINANCIAL SERVICES CORPORATION, a Michigan
corporation ("Xxxxxxx"), XXXXX X. XXXXXXX, a shareholder of BLOOMFIELD
ACCEPTANCE COMPANY, L.L.C., a Michigan limited liability company ("BAC") and
BLOOMFIELD SERVICING COMPANY, L.L.C, a Michigan limited liability company
("BSC") ("Xxxxxxx"), XXXXXXXXX X. XXXXXXXX, a shareholder of BAC and BSC
("Zelenock") AND XXXXXXX X. XXXXX, a shareholder of BAC and BSC ("Urban"), (each
a "Shareholder" and collectively, the "Shareholders"), and NBD BANK, a Michigan
banking corporation, as escrow agent ("Escrow Agent"). All capitalized terms
used, but not otherwise defined, in this Agreement have the same meanings as in
the Agreement and Plan of Merger (the "Merger Agreement"), dated February 17,
1998, to which Xxxxxxx and the Shareholders are parties, a copy of which
(without Exhibits or Schedules) is attached to this Agreement for reference
purposes only.
RECITALS:
A. Pursuant to the Merger Agreement, BAC Acquiring Sub will merge with
and into BAC, with BAC 's shareholders receiving common stock of Xxxxxxx. BSC
Acquiring Sub will merge with and into BSC, with BSC's shareholders receiving
common stock of Xxxxxxx.
B. Pursuant to the Merger Agreement, Xxxxxxx will issue 9,091 shares of
Xxxxxxx common stock to the Shareholders in respect of the Special
Consideration, which shares will be deposited into escrow to be held in trust by
the Escrow Agent for a period of three (3) years in connection with the
Shareholders' obligations under the Technology Agreement between BAC, BSC,
Systems/Software Solutions, Inc., a Michigan corporation ("S3I"), Xxxxxxx
Xxxxxxxx, P.C. (the "Firm") and the Shareholders, dated as of January 29, 1998.
C. The Shareholders have developed an integrated system for processing
applications and commitments for and closing commercial mortgage loans,
particularly those intended for securitization (the "System"). The Shareholders
estimate that approximately one-half of the System relates to traditional legal
functions associated with commercial lending (the "Legal IP") and one- half of
the System relates to the financial aspects of commercial lending (the
"Financial IP").
D. The Shareholders have assigned all right, title and interest in and
to the Legal IP to S3I, and have assigned all right, title and interest in and
to the Financial IP to BAC and BSC. BAC and BSC have assigned all right, title
and interest in and to the Financial Software to S3I;
E. The parties have entered into the Technology Agreement to establish
their respective rights and responsibilities regarding the System.
X. Xxxxxxx and the Shareholders have agreed to execute and deliver this
Agreement in order to more fully and completely document the understandings
generally described in Recitals A through E above.
NOW, THEREFORE, for and in consideration of the foregoing Recitals, the
mutual covenants and agreements set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the
undersigned agree as follows:
1. APPOINTMENT OF ESCROW AGENT. Xxxxxxx and the Shareholders hereby
appoint NBD Bank as Escrow Agent, to hold the Escrow Shares, as
defined, in trust for the benefit of the
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appropriate party and to act in accordance with the terms and
conditions set forth in this Agreement, and Escrow Agent hereby accepts
such appointment in accordance with such terms and conditions.
2. DEPOSITS INTO ESCROW. Contemporaneously with the execution and delivery
of this Agreement or upon issuance by Xxxxxxx'x transfer agent, the
Shareholders have deposited certificates representing 9,091 shares of
Xxxxxxx common stock (the "Escrow Shares") with Escrow Agent and
Assignments Separate from Certificate in the form attached hereto as
Exhibit "A". Escrow Agent hereby acknowledges receipt of the Escrow
Shares, and Escrow Agent further agrees to hold and disburse the Escrow
Shares in accordance with the terms of this Agreement.
3. ADDITIONAL DEPOSITS INTO ESCROW.
3.1 If the Shareholders shall receive or become entitled to receive
any:
(a) stock certificate(s) issued in respect of the Escrow
Shares, including, without limitation, any certificate representing a
stock dividend or payable in respect of the Escrow Shares or issued in
connection with any increase or reduction of capital, reclassification,
merger, consolidation, sale of assets, combination of shares, stock
split, spin-off or split-off;
(b) option, warrant or right, if issued in substitution or in
exchange for, or on account of, any of the Escrow Shares; or
(c) dividends or distributions on the Escrow Shares payable
other than in cash, including securities issued by other than Xxxxxxx;
the Shareholders shall accept the same and shall deliver the
same forthwith to Escrow Agent, in the exact form received
with, as applicable, the Shareholders' endorsement when
necessary or appropriate stock powers duly executed in blank.
Any property received by Escrow Agent hereunder shall be held
by Escrow Agent pursuant to the terms of this Agreement as
additional security for the Shareholders' obligations under
the Technology Agreement.
3.2 The Shareholders acknowledge that any cash dividends or
distributions on the Escrow Shares will be delivered directly
to Escrow Agent and shall be held by Escrow Agent pursuant to
the terms of this Agreement as additional security for the
Shareholders' obligations under the Technology Agreement. All
such funds received by the Escrow Agent to be retained under
the provisions of this Section 3.2 (the "Escrow Funds") shall
be invested from time to time, to the extent possible, in
United States Treasury Bills having a remaining maturity of 90
days or less and repurchase obligations secured by such United
States Treasury Bills, with any remainder being deposited and
maintained in a money market deposit account with Escrow
Agent, until disbursement of all such Escrow Funds. Escrow
Agent is authorized to liquidate in accordance with its
customary procedures any portion of the Escrow Funds
consisting of investments to provide for payments required to
be made under this Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
3.3 All additional deposits into escrow pursuant to this Section 3
shall together with the Escrow Shares be referred to
collectively as the "Escrow Assets".
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4. DISBURSEMENTS FROM ESCROW.
4.1 Upon receipt of an authorization letter from Xxxxxxx in
accordance with the terms of Section 4.2 and in substantially
the form attached hereto as Exhibit 4.1 (the "Notice"), Escrow
Agent is authorized to disburse the Escrow Assets to the
Shareholders, 60% to Xxxxxxx, 30% to Zelenock and 10% to
Urban, in accordance with the following schedule:
(a) 33 1/3% of the Escrow Assets one (1) year after the
date of this Agreement (the "Escrow Date");
(b) 33 1/3% of the Escrow Assets two (2) years after the
Escrow Date; and
(c) 33 1/3% of the Escrow Assets three (3) years after
the Escrow Date.
4.2 In order for the Shareholders to receive the Escrow Assets,
the Technology Agreement must be in full force and effect and
Xxxxxxx and Xxxxxxxx shall not be in default of Section 10 of
the Technology Agreement. Upon the Shareholders' request,
Xxxxxxx shall determine if the Shareholders have met the
foregoing requirements and deliver the Notice to Escrow Agent
which will state whether the Escrow Agent is authorized to
disburse the Escrow Assets to the Shareholders.
4.3 In the event that a Shareholder is no longer a party to the
Technology Agreement on the date when the Escrow Assets are
authorized to be disbursed, that portion of the Escrow Assets
such Shareholder would have received shall be distributed to
the remaining Shareholders, in accordance with their
respective percentage interests in the Escrow Assets.
4.4 In the event the Technology Agreement is no longer in full
force and effect or Xxxxxxx and Xxxxxxxx are in default under
Section 10 of the Technology Agreement, pursuant to Section
4.2, Xxxxxxx shall deliver the Notice to Escrow Agent
instructing Escrow Agent to release the remaining Escrow
Assets to Xxxxxxx.
4.5 Required Legend. Simultaneously with the release (hereafter a
"Release") to a Shareholder of any of the Escrow Shares from
this Agreement, the certificate or certificates with respect
to those Escrow Shares shall be delivered to Xxxxxxx for
endorsement with the following legend, which shall be
conspicuously placed on such certificates prior to their
return by Xxxxxxx to the applicable Shareholders:
"The sale, transfer, assignment, pledge, hypothecation or
other disposition of the shares represented by this
certificate is restricted by the provisions of the Bloomfield
Shareholders Agreement, dated as of March 5, 1998 (as it may
be amended from time to time), to which the holder of this
certificate, among others, is Party, a copy of which may be
inspected at the principal office of Xxxxxxx Financial
Services Corporation. The provisions of the Bloomfield
Shareholders Agreement are incorporated herein by reference."
4.6 Xxxxxxx shall determine whether the Technology Agreement is in
full force and effect and whether Xxxxxxx and Zelenock are in
default of Section 10 of the Technology Agreement.
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5. VOTING AND OTHER RIGHTS. The Shareholders shall be entitled to exercise
any and all voting and other consensual rights with respect to the
Escrow Shares.
6. EXCULPATION AND INDEMNIFICATION OF ESCROW AGENT.
6.1 Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct. Escrow Agent will have no
duties or responsibilities other than those expressly set
forth herein. Escrow Agent will be under no liability to
anyone by reason of any failure on the part of any party
hereto (other than Escrow Agent) or any maker, endorser or
other signatory of any document to perform such person's or
entity's obligations under any such document. Except to the
extent specifically provided for in this Agreement, Escrow
Agent is not obligated to render any statements or notices of
non-performance hereunder to any party hereto but may, in its
discretion, inform any party hereto of any matters pertaining
to this Agreement, provided such information is also given to
the other parties to this Agreement and their counsel. Escrow
Agent shall not be charged with knowledge of any fact,
including but not limited to performance or non-performance of
any condition herein, unless it has actually received written
notice thereof. Except for this Agreement and the instructions
to Escrow Agent pursuant to the terms of this Agreement,
Escrow Agent will not be obligated to recognize any agreement
between any or all of the parties hereto, notwithstanding its
knowledge thereof. Without limiting the foregoing, Escrow
Agent shall in no event be liable in connection with its
investment or reinvestment of any cash held by it hereunder in
good faith, in accordance with the terms hereof, including,
without limitation, any liability for any delays (not
resulting from its gross negligence or willful misconduct) in
the investment or reinvestment of any Escrow Funds, or any
loss of interest incident to any such delays.
6.2 In the event of any disagreement or the presentation of
adverse claims or demands in connection with the Escrow
Assets, Escrow Agent shall, at its option, be entitled to (i)
implead the Escrow Assets in any court having jurisdiction
thereof; or (ii) refuse to comply with any such claims or
demands during the continuance of such disagreement and may
refrain from delivering any item affected thereby. As a result
of such action or inaction, Escrow Agent shall not become
liable to Xxxxxxx or the Shareholders, or to any other person,
due to its failure to comply with any such adverse claim or
demand. Escrow Agent shall be entitled to continue, without
liability, to refrain and refuse to act:
6.21 Until all the rights of the adverse claimants have
been finally adjudicated by a court or panel of
arbitrators having jurisdiction over the parties and
the items affected thereby, after which time the
Escrow Agent shall be entitled to act in conformity
with such adjudication; or
6.22 Until all differences shall have been adjusted by
agreement and Escrow Agent shall have been notified
thereof and shall have been directed in writing
signed jointly or in counterpart by Xxxxxxx and the
Shareholders and by all persons making adverse claims
or demands, at which time Escrow Agent shall be
protected in acting in compliance therewith.
6.3 Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other
writing delivered to it hereunder without being required to
determine the authenticity or the correctness of any fact
stated therein or
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the propriety or validity of the service thereof. Escrow Agent
may act in reliance upon any instrument or signature believed
by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been
duly authorized to do so. Escrow Agent may conclusively
presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full
power and authority to instruct Escrow Agent on behalf of that
party unless written notice to the contrary is delivered to
Escrow Agent. Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Agreement
and shall not be liable for any action taken or omitted by it
in good faith in accordance with such advice.
6.4 The bankruptcy, insolvency or absence of any of the parties to
this Agreement shall not affect or prevent performance by
Escrow Agent of its obligations and instructions hereunder.
6.5 Except with respect to claims based upon such gross negligence
or willful misconduct that are successfully adjudicated
against Escrow Agent, Xxxxxxx and the Shareholders, jointly
and severally, shall indemnify and hold harmless Escrow Agent
from and against any fees, costs, expenses (including
reasonable counsel fees and disbursements), claims, damages or
losses suffered by Escrow Agent in connection with this
Agreement, the services of Escrow Agent hereunder, or the
filing by Escrow Agent of any action related to this
Agreement, other than as a result of Escrow Agent's gross
negligence or willful misconduct. As between Xxxxxxx and the
Shareholders, the party, if any, which unreasonably causes the
Escrow Agent to incur expenses shall bear those expenses. If
neither party is at fault, the costs shall be paid one-half by
Xxxxxxx and one-half by the Shareholders (pro-rata among them
in proportion to their respective shares of the Escrow Shares
held hereunder when those costs were first incurred).
6.6 Escrow Agent does not have any interest in the Escrow Assets
deposited hereunder but is serving as escrow holder only and
having only possession thereof. Any payments of income from
this escrow shall be subject to withholding regulations then
in force with respect to United States taxes. The parties
hereto will provide Escrow Agent with appropriate Internal
Revenue Service Forms W-9 for tax identification number
certification, or non-resident alien certifications. This
Section shall survive notwithstanding any termination of this
Agreement or the resignation of Escrow Agent.
6.7 Escrow Agent makes no representation as to the validity,
value, genuineness or the collectibility of any security or
other document or instrument held by or delivered to it.
6.8 Escrow Agent shall not be called upon to advise any party as
to the wisdom in selling or retaining or taking or refraining
from any action with respect to any securities or other
property deposited hereunder.
6.9 Xxxxxxx and the Shareholders hereby authorize Escrow Agent,
for any securities held hereunder, to use the services of any
United States central securities depository it reasonably
deems appropriate, including, without limitation, the
Depository Trust Company and the Federal Reserve Book Entry
System.
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7. REIMBURSEMENT FOR OUT-OF-POCKET EXPENSES OF ESCROW AGENT; FEES.
7.1 Escrow Agent shall be entitled to reimbursement from Xxxxxxx
(which expense may be charged by Xxxxxxx to BAC and BSC) for
out-of-pocket expenses paid or incurred by it in the
administration of its duties hereunder, including, but not
limited to, all reasonable counsel, advisors' and agents' fees
and disbursements (except those for which indemnification
would not be available under Section 6.5 hereof) and all taxes
or other governmental charges, provided, however, that all
expenses or costs incurred by Escrow Agent in connection with
a Claim shall be submitted to the trier of fact charged with
resolving the Claim and shall be assessed to the Shareholders
if the trier of fact so determines. Escrow Agent is hereby
granted a lien on, and security interest in, the Escrow shares
to secure its rights to payment or reimbursement under this
Agreement and may, without notice, set-off against any and all
amounts held by it hereunder, and retain for its own account,
the full amount of any and all fees, costs, losses,
liabilities, damages and expenses. All such expenses shall be
paid by Xxxxxxx. Escrow Agent shall provide copies of invoices
and the like evidencing such expenses to both Xxxxxxx and the
Shareholders.
7.2 Escrow Agent's fees for serving as Escrow Agent shall be
payable by Xxxxxxx in accordance with Exhibit B attached
hereto.
8. TERMINATION OF AGREEMENT. This Agreement will terminate on the final
disposition to Xxxxxxx or the Shareholders of the Escrow Assets in
accordance herewith, except for the respective rights and obligations
of Escrow Agent and the other parties hereto under Sections 6, 7 or 10
hereof, which will survive such disposition.
9. RESIGNATION OF ESCROW AGENT.
9.1 The Escrow Agent may resign as such following the giving of
thirty (30) days' prior written notice to the other parties
hereto. Similarly, the Escrow Agent may be removed and
replaced following the giving of thirty (30) days' prior
written notice to the Escrow Agent by all of the other parties
hereto. In either event, the duties of the Escrow Agent shall
terminate thirty (30) days after the date of such notice (or
as of such earlier date as may be mutually agreeable), and the
Escrow Agent shall then, upon payment of its fees, costs and
expenses, deliver the Escrow Assets to a successor Escrow
Agent as shall be appointed by the other parties hereto as
evidenced by a written notice filed with the Escrow Agent.
9.2 If the other parties hereto are unable to agree upon a
successor prior to the expiration of thirty (30) days
following the date of the notice of resignation or removal,
the then acting Escrow Agent may petition any court of
competent jurisdiction for the appointment of a successor
Escrow Agent or other appropriate relief; and any such
resulting appointment shall be binding upon all of the parties
hereto.
9.3 Upon payment of the fees, costs and expenses of the Escrow
Agent, and acknowledgment by any successor Escrow Agent of the
receipt of the Escrow Assets, the then acting Escrow Agent
shall be fully released and relieved of all further duties,
responsibilities, and obligations under this Agreement.
10. RECORDS. Escrow Agent will maintain accurate records of all
transactions hereunder. Promptly after the termination of this
Agreement, and promptly after the end of each calendar month prior to
such termination, Escrow Agent shall provide Xxxxxxx and the
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Shareholders with a complete copy of such records, certified by Escrow
Agent to be a monthly statement showing all transactions in the account
established by this Agreement. The authorized representatives of
Xxxxxxx and the Shareholders will also have access to such records at
all reasonable times during normal business hours upon reasonable
notice to Escrow Agent.
11. NOTICES. Any and all notices, requests, demands and other
communications permitted under or required pursuant to this Agreement
(each, a "notice") shall be in writing and shall be deemed given if
personally delivered, faxed (to be followed by hard copy delivered in
one of the manners contemplated in this Section 11) or mailed, postage
prepaid, certified or registered mail, return receipt requested, to the
parties at the addresses or fax numbers set forth below, or at such
other addresses as they may indicate by written notice given as
provided in this Section 11:
If to Shareholders:
Xxxxxxx Zelenock, P.C.
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
If to Xxxxxxx: With a required copy to:
00000 Xxxxxxxxxx Xxxx, Xxxxx 000 Jaffe, Raitt, Heuer & Xxxxx
Xxxxxxxxxx Xxxxx, XX 00000 Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Fax: (000) 000-0000 Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx Fax: (000) 000-0000
Attention: Xxxxx Sugar
If to Escrow Agent:
NBD Bank
000 Xxxxxxxx Xxxxxx
Corporate Trust Department 00xx Xxxxx
Xxxxxxx, XX 00000
Fax (000) 000-0000
Attention: Xxx Xxxxxxx
Xxxxxxx and the Shareholders each shall provide the other with a copy
of any notices given to Escrow Agent.
12. PROHIBITION AGAINST SECURITY INTERESTS. Xxxxxxx and the Shareholders
hereby covenant and warrant that each shall keep its respective
interests in this Agreement and all amounts, sums, monies, and deposits
to be made pursuant hereto free from all liens, claims, encumbrances
and third-party interests of any kind whatsoever without the prior
written consent of the other party. In addition, Xxxxxxx and the
Shareholders hereby agree that neither party shall allow its respective
interests in this Agreement and all amounts, sums, monies and deposits
to be made pursuant hereto to be pledged, hypothecated, mortgaged or
otherwise used as collateral or security without the prior written
consent of the other party. The Shareholders covenant and warrant that
while the Escrow Assets are subject to this Agreement, the Shareholders
will not sell, convey or otherwise dispose of any of the Escrow Assets
or any interest therein, or create, incur, or
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permit to exist on any pledge, mortgage, lien, charge, encumbrance or
any security interest whatsoever in or with respect to any of the
Escrow Assets except for that created hereby and/or Permitted Transfers
under and as defined by the express terms of either of the Shareholders
Agreement among Xxxxxxx, Shareholders and others dated as of March 4,
1998 and/or the Bloomfield Shareholders Agreement among the
Shareholders, dated as of this date. However, the Escrow Agent shall
disregard any such attempted transfer that is asserted to be a
"Permitted Transfer" unless and until it shall receive a written
consent thereto from Xxxxxxx, together with explicit and complete
written instructions from the transferor, the transferee and Xxxxxxx as
to those steps that are to be taken by Escrow Agent in order to
accommodate that Permitted Transfer under this Agreement. The
Shareholders warrant, and will at their own expense defend, Xxxxxxx'x
right, title and interest in and to the Escrow Assets against the
claims of any person.
13. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in
more than one counterpart, all of which shall together constitute a
single agreement. The parties may execute more than one copy of this
Agreement, in which case each executed copy shall constitute an
original. Copies (whether facsimile, photostatic or otherwise) of
signatures to this Agreement shall be deemed to be originals and may be
relied on to the same extent as the originals.
14. ASSIGNMENT AND MODIFICATION. This Agreement and the rights and
obligations hereunder of any of the parties hereto may not be assigned
without the prior written consent of the other parties hereto having
been obtained. Subject to the foregoing, this Agreement will be binding
upon and inure to the benefit of each of the parties hereto and their
respective successors and permitted assigns. No other person will
acquire or have any rights under, or by virtue of, this Agreement. This
Agreement may be changed or modified only in writing signed by all of
the parties hereto. In the event that there is a conflict between the
terms and conditions of the Purchase Agreement and the terms and
conditions of this Agreement, the terms and conditions of this
Agreement shall control.
15. GOVERNING LAW. The parties agree that all actions or proceedings
arising in connection with this Agreement and the instruments,
agreements and documents executed pursuant to the terms of this
Agreement shall be tried, litigated and arbitrated only in courts of
the United States located in the Eastern District of Michigan, Southern
Division, the Oakland County, Michigan Circuit Court, or the office of
the American Arbitration Association located nearest Southfield,
Michigan The parties each waive any objection to such venue and any
claim that such action has been brought in an inconvenient forum. The
provisions of this Section 15 shall survive the termination of this
Agreement.
16. HEADINGS. Headings in this Agreement are for the purposes of reference
only and shall not limit or otherwise affect any of the terms hereof.
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IN WITNESS WHEREOF, the parties have duly executed this Escrow
Agreement as of March 5, 1998.
XXXXXXX FINANCIAL SERVICES CORPORATION,
a Michigan corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Its: President, Chief Executive Officer and
Chief Financial Officer
SHAREHOLDERS
/s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX
/s/ Xxxxxxxxx X. Xxxxxxxx
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XXXXXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxx
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XXXXXXX X. XXXXX
NBD BANK, a Michigan banking corporation, AS ESCROW
AGENT
By:
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Its:
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